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High-Profile Partners Pitch Tents in Sydney

SYDNEY, Australia Sept. 25 -- Samsung Electronics believes in the Olympics, in the brand, the logo and the prestige it expects to receive from investing heavily in them. The Korean company is paying $55 million as one of the International Olympic Committee's 11 worldwide sponsors, and is persuaded that the connection will further propel its cellular phone business into world leadership.

At the Summer Olympics, Samsung is the newest of The Olympic Partners (T.O.P.) in the current quadrennium. Needing to elevate its profile beyond Asia, it created a tented pavilion out of a garage as a showcase for its future products and a meeting place for athletes and their families.

The pavilion, visible from across Sydney Olympic Park, boasts a giant screen for fans to watch the Summer Games and an indoor theater with a regular show by Cirque de Soleil acrobats.

It's a very different presence from better-known, veteran sponsors like McDonald's with its seven restaurants or Visa with its automated teller machines (yes, it's true, you can't charge anything on the Olympic grounds with any other card) or IBM with its information technology.

"We have second-tier brand awareness, which is why we're utilizing the Olympics to make people more aware of us," said Il-Hyung Chang, a vice president of Samsung, whose chairman, Kun-Hee Lee, is an I.O.C. member. "Being a sponsor means we're world-class."

Like bottles of Coke, Big Macs and Kodak film, Samsung's cell phones are nearly ubiquitous here; 25,000 of its phones are in use by Olympic officials and reporters, among others, a strategy that Samsung hopes will further energize its cell phone challenge to Nokia, Motorola and Ericcson.

The look of the Sydney Games is different from that of four years ago in Atlanta, where downtown was a carnival of tacky vendors, tasteless sponsor displays and ambush marketing.

At Olympic Park, the sponsors are visible, but not overwhelming. Downtown, there are Olympic banners and sponsor names wrapped around buses and the city's monorail, but the impact is more tasteful than grotesque.

"The people from Sydney came to Atlanta and saw what could go wrong," said Dick Pound, the first vice president of the I.O.C. who negotiates its television and marketing deals. "In Atlanta, the city authorities actively worked against the Olympic committee, even ambushing it."

This is the first Olympics since the Salt Lake City corruption scandal, which led to the firing or resignation of 10 I.O.C. members and the passage of reforms that await the test of time and temptation. Except for John Hancock Financial Services, the T.O.P. sponsors quietly waited out the storm to find from I.O.C. surveys and their own research that their investment is not tainted.

"It surprised us," said Chang, "but it showed the scandal had nothing to do with the athletes or the Games." Rosemary Windsor, vice president of Olympic and corporate events for United Parcel Service, added: "Large companies recognize that there are scandals. You can't go unscathed."

The studies emboldened the International Olympic Committee to raise its sponsorship fees. "It's the most underpriced marketing program in the world," Pound said. "We remind the sponsors of that very often."

The I.O.C. never acknowledges what it charges, but Lesa Ukman, the publisher of IEG Sponsorship Report, a trade publication, said the new deals will cost sponsors $65 million for the 2002 Winter and 2004 Summer Games, up from the current $50 million. The fees are payable in cash, equipment or services; together, they added up to $550 million for the 1998-2000 period.

Depending upon how actively a sponsor want to deploy its I.O.C. deal -- the Olympics can be marketed in 200 countries -- the cost of advertising, promotion, and public relations could be three or four times the I.O.C.'s fee. Samsung said its Olympic program will cost it $200 million.

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Is it worth it? How do sponsors determine how the Olympic association delivers for them?

The group is unlikely to have precise data that show a direct upswing in sales due to the Olympic sponsorships. Most describe the connection as one that can open the door to future business, persuade consumers to sample a product, or establish a warm feeling that the company and the customer are each passionate supporters of the same Olympic cause.

And if that persuades someone to send an overnight letter by United Parcel, rather than Fedex, or but a Panasonic big-screen TV and not Sony's, well, that's why sponsors enlist with the I.O.C.

"If you're looking for a world platform, it's either the Olympics or the World Cup," Ukman said, noting the advantage of the World Cup is stadiums with on-field signage, which is barred at the Olympics. "Samsung needs it for brand awareness; Coke and McDonald's need it to keep people excited about buying Coke or going into a McDonald's. Visa's done the most; it can measure its business at banks, restaurants and store and how many people use the cards."

Although IBM did not renew (the Sema Group takes over after Sydney), it still deployed a larger, and more complex technology infrastructure to deliver results and information "than the moon shot," said Eli Primrose-Smith, IBM's vice president of worldwide Olympic sponsorship.

She said that IBM measures the value of its I.O.C. deal by the potential business it can develop by showing customers how it integrates its hardware and software. "This showcases our technology and the expertise of our people in a high-visibility way," Primrose-Smith said.

Tom Shepard, a senior vice president of Visa International, said the company has developed programs that use the Olympics to drive up card usage, and has noticed a 23 percent jump in Australian card volume since it began working with Australian and Sydney tourist associations.

"But it's impossible to separate the Olympics from the other marketing programs we have," he said. "They're all integrated into our overall marketing mix. We're not able to clearly differentiate the difference in sales volume specifically because of our Olympic expenditure."

And of course, such expenditures keep competitors out. Not every sponsor will define a T.O.P. sponsor as a defensive measure. But wouldn't American Express like to be the only card accepted throughout an Olympic site visited by tens of thousand of people daily for 17 days?

For others, it is a way to provide incentives to employees, such as Hancock, which paid for its sponsorship with increased premium revenues from its top salespeople. And United Parcel, like Samsung, wants its package delivery system to be viewed more familiarly outside its domestic turf.

"It's very hard to say if it's increasing our business," Windsor said. "It's not like selling cheeseburgers or another consumer product." But as an official sponsor, United Parcel hopes it can enlarge its business at least with other sponsors, licensees and Olympic organizations.

So far, the International Olympic Committee has renewed nine sponsors for its fifth T.O.P. program at a pace faster than ever before. With IBM gone, United Parcel is the only other sponsor not yet committed to reenlisting.

If United Parcel declines, the I.O.C. will surely find a replacement, assuming it believes in the gospel of associating itself with the Olympic brand. And the Olympic committee will also open a 12th category -- all to infiltrate further into Fortune 500 territory and make still more money.

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A version of this article appears in print on September 24, 2000 of the National edition with the headline: High-Profile Partners Pitch Tents in Sydney. Order Reprints|Today's Paper|Subscribe